JEREMY Hunt has insisted he is helping the whisky industry despite alcohol duty changes in his budget leaving makers “not just livid, but insulted”. 

Defending a 10.1 per cent increase in duty from August after a six-year freeze, the Chancellor said related Treasury reforms would be “beneficial to whisky distillers”.

It follows a furious backlash from the Scotch Whisky Association (SWA), who claim the Government has broken a 2019 vow to ensure the tax system supports the industry.

Mark Kent, chief executive of the Scotch Whisky Association (SWA), has demanded an urgent meeting with the Chancellor to discuss the “historic blow” to the sector.

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Scottish Secretary Alister Jack yesterday admitted he had unsuccessfully lobbied Mr Hunt against raising the duty, adding it was “not what I wanted for the Scottish industry”.

Following the budget, the tax burden on the price of an average bottle of whisky in the UK will rise from 70% to 75% from August, with £11.40 of the £15.22 being tax and duty. 

However Mr Hunt insisted the Government was keeping duty levels low.

He told BBC Radio Scotland this morning: “We have been working very closely with the Scotch Whisky Association and we have frozen alcohol duty until August.”

He also defended forthcoming  “big reforms” to the alcohol duty system, which will mean duty is linked to the strength of the drink.

He said the new approach would be “beneficial to whisky distillers”, 

He said: “In real terms this means we will have the lowest level of duty for over 100 years, so we are keeping duty levels low.

“We will continue to engage with the industry and we want to do something that will mean they are successful and prosperous going forward.”

The Herald:

Graeme Littlejohn, director of strategy at the SSWA, said it was "telling" that the Chancellor did not have full support for the measure from his Cabinet colleagues.

He told the BBC: "I have spoken to many distillers in the last 24 hours and they are not just livid, they are insulted by the decision made by the Chancellor. The UK government made a commitment back in 2019 to ensure the tax system is supporting Scottish whisky.

"Yesterday's Budget has increased the tax burden on Scottish whisky and it went further by increasing the competitive disadvantage that distillers face in pubs, bars and restaurants. We want a reversal of the 10% tax hike, which has broken that commitment."

Whisky has benefitted from duty freezes in nine of the last ten budgets.

Mr Littlejohn said revenue from Scotch whisky and other spirits in the UK had increased by more than £1bn since the previous duty rise in 2017, and was now worth close to £4.5bn in total to the Exchequer annually, and had "grown faster because of those freezes".

He said the freezes had seen consumers switching to more "premium" brands. 

He said: "They are drinking less, and drinking better, which suits quality premium drinks like Scottish whisky. That in turn generates more revenue to the Exchequer."

He said a duty rise "of this magnitude" would "inevitably" be passed on to drinkers.

He said: "It is important the Chancellor re-thinks this. Currently, far from reducing inflation, this will be an inflationary measure by increasing the cost to consumers."

Two weeks after the duty hike, the Scottish Government’s deposit return scheme is due to add another 20p to each bottle of drink sold in Scotland, though this can be refunded.

In a letter to the Chancellor, Mr Kent also said: “The tax rise breaks the pledge made by the UK Government to ‘ensure the tax system is supporting Scotch whisky’. This is a commitment the industry takes seriously and our member companies want to see it fulfilled.”

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He said it will be the “largest duty rise since 1981”, and comes at the time when “the industry is facing significant domestic headwinds, including the soaring costs of energy”.

Mr Kent also said a reduction in duty for drinks sold on draught would “increase the tax discrimination experienced by distillers” by “widening the gap” in tax between spirits and products such as beer and cider.

“This was a fundamental flaw in the duty reforms published by HM Treasury due to be implemented in August which we have repeatedly pointed out,” the SWA chief executive insisted.

He added that measures in the Budget had compounded the problem and would mean “the new system will be a broken system, disadvantaging the Scotch whisky industry from the outset”.